Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

US Government Kicks Off 2020 With Another Big Deficit

  by    0   0

The US government posted another massive deficit to start out calendar-year 2020.

According to the latest data released by the US Treasury Department, Uncle Sam spent $32.6 billion more than it took in last month. That compares with an $8.7 billion surplus in January 2019. Analysts had projected an $11.5 billion shortfall in January.

That brings the total deficit in FY2020 to $389.2 billion. So far, the deficit in fiscal 2020 is about $79 billion bigger than it was at this point in FY2019.

According to the Congressional Budget Office, the federal budget shortfall will hit $1.02 trillion in FY 2020 and rise into the foreseeable future.  The CBO warns that the ballooning national debt poses a “significant risk” to the economy and financial system.

Overspending continues to drive the ever-widening deficits. The federal government took in $372 billion in January. That was a 10% increase in revenue compared with January 2019. But spending was up $405 billion. That represents a 22% increase year-on-year.

So far in FY2020, the federal government has already spent nearly $1.5 trillion.

These are the kind of budget deficits one would expect to see during a major economic downturn. The federal government has only run deficits over $1 trillion in four fiscal years, all during the Great Recession. We’re approaching that number today, despite having what Trump keeps calling “the greatest economy in the history of America.”

Generally, during economic expansions, government spending on social programs shrinks and tax revenues climb with increased economic activity. Revenues have increased over the last year, even with the Republican tax cuts, but they haven’t kept pace with the increase in government spending.

President Trump didn’t even mention the growing national debt during his State of the Union address. As Peter Schiff noted in a tweet, “During his 90-minute #SOTU address President Trump did not urge Congress to cut one dime of government spending, or eliminate one government agency or department, even as the national debt is soaring by record amounts during an economy he claims is booming.”

Much has been made in cuts to social programs in Trump’s proposed 2021 budget. But there are spending increases in other areas and the overall spending plan comes in at $4.8 trillion compared to $4.4 trillion in actual outlays during FY2019.

Republicans argue that economic growth will ultimately fix the national debt. The Trump plan claims to balance the budget in 15 years. But this scenario depends on 3% GDP growth every year and no recession. Last year, GDP growth was 2.3%.

The CBO warns that the growing “debt would dampen economic output over time.”

In fact, studies have shown that GDP growth decreases by an average of about 30% when government debt exceeds 90% of an economy. US debt already stands at around 106.9% of GDP. Ever since the US national debt exceeded 90% of GDP in 2010, inflation-adjusted average GDP growth has been 33% below the average from 1960–2009, a period that included eight recessions.

Europe’s spending binge serves as a prime example of the impact of debt on economic growth.

The reality is America’s fiscal condition is circling the drain. The bottom line is that the spending trajectory is unsustainable. If the US government is running $1 trillion deficits now, what will the country’s financial situation look like when the next recession hits?

Gold IRA Rollover to 401k

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Millions of Americans Struggling to Pay Their Bills

We read a lot about the big-picture impacts of the economic meltdown caused by the government response to the coronavirus pandemic. We hear about the millions thrown out of work, the surge in corporate bankruptcies and small businesses shutting down, and the specter of surging inflation. But how has all of this impacted the average […]

READ MORE →

Inflation Is Here

The mainstream isn’t worried about inflation. In fact, we’re told inflation is muted. And that’s true, at least by some measures. We haven’t seen the rising consumer price index (CPI) you might expect as central banks inject trillions of dollars created out of thin air into the economy. But just because government numbers don’t reflect […]

READ MORE →

The Stock Market Is Completely Untethered From Economic Reality

We’ve been saying for months that the stock market has completely disconnected from economic reality. The markets have hit record highs despite the economic chaos caused by the government response to COVID-19. As Peter Schiff put it in a podcast back in May, the markets are on a Fed-induced sugar high. In a recent article, […]

READ MORE →

Ranks of the Long-Term Unemployed Growing

The mainstream spin on unemployment is that things are improving. The unemployment rate is coming down. The number of weekly jobless claims recently fell below 800,000 for the first time since government lockdowns in response to the pandemic went into high gear last March. But there are some troubling signs that undercut this good-news narrative. […]

READ MORE →

Rickards: Why Gold?

Why gold? In a recent article, Jim Rickards offers three reasons the biggest gains in gold prices are yet to come.

READ MORE →

Comments are closed.

Call Now